|Smokin' Joe Biden rides to the rescue and finally gets through a fiscal cliff package.|
— Tax rates will permanently rise to Clinton-era levels for families with income above $450,000 and individuals above $400,000. All income below the threshold will permanently be taxed at Bush-era rates.
— The tax on capital gains and dividends will be permanently set at 20 percent for those with income above the $450,000/$400,000 threshold. It will remain at 15 percent for everyone else. (Clinton-era rates were 20 percent for capital gains and taxed dividends as ordinary income, with a top rate of 39.6 percent.)
— The estate tax will be set at 40 percent for those at the $450,000/$400,000 threshold, with a $5 million exemption. That threshold will be indexed to inflation, as a concession to Republicans and some Democrats in rural areas like Sen. Max Baucus (D-Mt.).
— The sequester will be delayed for two months. Half of the delay will be offset by discretionary cuts, split between defense and non-defense. The other half will be offset by revenue raised by the voluntary transfer of traditional IRAs to Roth IRAs, which would tax retirement savings when they’re moved over.
— The pay freeze on members of Congress and all other federal civilian employees, which Obama had lifted this week, will be re-imposed, .
— The 2009 expansion of tax breaks for low-income Americans: the Earned Income Tax Credit, the Child Tax Credit, and the American Opportunity Tax Credit will be extended for five years.
— The Alternative Minimum Tax will be permanently patched to avoid raising taxes on the middle-class.
— The deal will not address the debt-ceiling, and the payroll tax holiday will be allowed to expire.
— Two limits on tax exemptions and deductions for higher-income Americans will be reimposed: Personal Exemption Phaseout (PEP) will be set at $250,000 and the itemized deduction limitation (Pease) kicks in at $300,000.
—The full package of temporary business tax breaks — benefiting everything from R&D and wind energy to race-car track owners — will be extended for another year.
— Scheduled cuts to doctors under Medicare would be avoided for a year through spending cuts that haven’t been specified.
— Federal unemployment insurance will be extended for another year, benefiting those unemployed for longer than 26 weeks. This $30 billion provision won’t be offset.
— A nine-month farm bill fix will be attached to the deal, Sen. Debbie Stabenow told reporters, averting the newly dubbed milk cliff.
I understand that the House is supposed to vote on this by 1:00 EST today. However there are still rumors that many House members are not planning to vote for it and John Boehner has also made some remarks about possible modifications, which would kill the bill outright.
Still there is hope that it will pass.
Of course this bill only postpones those deep spending cuts for two months so it really is nothing more than a Band-Aid applied to a potential internal hemorrhage, but it is still a lot better than many thought the Senate could ever hope to agree on.
I wonder if this new Congress will really be any more rational or if THIS is the kind of thing we will see for the next two years? God, let's hope not.
Update: There are some who think the President completely punked the Republicans with this deal:
Higher taxes on the richest Americans (the level is yet to be determined, and the president pointedly stayed away from confirming the $400K/$450K numbers floating around, but taxes are going up). He just forced Grover Norquist's Republican party to allow a tax increase. Big. F*cken. Deal.
The middle class tax credits, such as the Earned Income Tax Credit, child tax credit education tax credit and other Obama stimulus tax credits are staying in place for 5 years, as are the breaks for small businesses, especially for the clean energy industry (I don't think most people running around with their hair on fire realize how big a deal this is for the environmental community). The Alternative Minimum tax is fixed permanently not to affect the middle class.
Unemployment benefits extension.
An increase in the estate tax rate to 40%.
What do the Republicans get in return? Bupkiss. Nada. Nothing. A big fat zero. So basically, the president permanently protects working people and the poor and the middle class, permanently raises taxes on the rich, and the additional tax revenue from that. Republicans get no entitlement changes, not even a permanent aversion of the cuts hitting defense and other Republican sweetheart industries.
I know there are those on the Left who think the President gave away too much, but in the end it looks like the President did that whole Jedi mind trick thing again.
Update 2: Politicususa agrees that the President (And Joe Biden) cleaned the Republican's clock..